US stocks erased gains and slumped in Tuesday trading as sliding tech stocks offset hopes for a capital-gains tax cut.
Apple, Amazon, Facebook, Microsoft, and other tech giants sank through the session as risk appetites improved and investors moved into neglected sectors. Financial and industrial stocks gained the most.
Indexes soared Tuesday morning as investors cheered the possibility of a capital-gains tax cut. President Trump said Monday afternoon he was considering lowering the capital gains tax rate, a move that would boost investors’ realized profits. Trump decided against such a cut in September, saying it did too little for the middle class.
While the president can’t unilaterally slash the capital-gains tax rate, he could adjust it by the level of inflation through an executive order. Still, such a move would likely prompt legal challenges.
Here’s where US indexes stood at the 4 p.m. ET market close on Tuesday:
The S&P 500 approached all-time highs before paring gains and falling into a single-day loss.
In vaccine news, Russian President Vladimir Putin said on Tuesday that the country had developed and approved the first successful coronavirus vaccine. Futures moved higher after the announcement, though global health authorities have expressed skepticism about the vaccine’s safety.
Clinical trials of the vaccine took place over just two months, and the Russian government approved its use before phase-three studies, set to begin on Wednesday.
“I know that it works quite effectively, forms strong immunity, and, I repeat, it has passed all the needed checks,” Putin said on Tuesday, according to Reuters. The president added that one of his daughters received the vaccine.
Investors also cheered news that US COVID-19 hospitalizations fell to their lowest level in a month, suggesting the country’s surging death toll could soon slow.
Inovio Pharmaceuticals tumbled after missing quarterly estimates. The company also announced that the next trials of its experimental coronavirus vaccine would begin in September, later than expected.
The Chinese electric-car maker Nio erased initial gains as the company’s earnings beat drove a wave of profit-taking. The Tesla competitor beat second-quarter expectations and posted a positive gross margin for the first time ever. Nio also guided for record revenue and vehicle deliveries in the third quarter.
Yet the largely positive report wasn’t enough to drive shares higher, as stronger-than-usual selling pushed shares into the red in the first 30 minutes of trading.
Gold was on course to fall the most in seven years as investors pivoted from safe havens to risk assets. Many investors were “looking for an excuse to lock-in profits,” Edward Moya, senior market analyst at OANDA, said, adding that Russia’s vaccine news was reason enough for some sellers.
Oil futures similarly wiped early gains and sank in afternoon trading. West Texas Intermediate crude fell as much as 1.1%, to $41.49 per barrel. Brent crude, the international benchmark, dropped 1.3%, to $44.39 per barrel, at intraday lows.
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